Georgia Supreme Court Clarifies Pre-Suit Offer Requirements
On March 6, 2017, the Georgia Supreme Court answered certified questions regarding the application of Georgia’s Pre-Suit Offer statute concluding that O.C.G.A. § 9-11-67.1, the statute dealing with the formation of settlement agreements pursuant to pre-suit offers to settle tort claims arising from the use of a motor vehicle, does not prohibit a claimant from conditioning acceptance of a pre-suit offer upon the performance of an act, such as timely or prompt payment. Grange Mutual Casualty Co. v. Woodard, 797 S.E.2d 814 (2017). In doing so, the Court clarified that the statute sets forth the minimum requirements for pre-suit offers. Beyond those required terms, the Court explained, parties are free to add additional terms. This includes presenting a pre-suit offer as a unilateral contract that demands acceptance in the form of performance (in addition to the required written acceptance) before it becomes a binding and enforceable settlement.
The case deals with a settlement following an automobile accident. The Woodards, the parents of the deceased, made a settlement offer through their attorney to Grange Mutual Casualty Company, the defendant’s insurer. The settlement offer required that Grange accept it in writing within thirty (30) days, and that Grange remit payment within ten (10) days of the written acceptance. Grange accepted the offer on day 29, and issued the required checks seven (7) days later. However, an addressing error delayed the checks’ arrival. Eleven (11) days after the checks were required to arrive, and before claimants received the checks, claimants’ counsel retracted the offer. Grange immediately sent new checks, which claimants’ counsel returned two days later.
Grange filed suit against the Woodards in United States District Court for the District of Georgia for breach of the settlement contract. The Woodards argued the parties did not reach a settlement agreement because Grange failed to satisfy the payment condition. Grange argued that, under Georgia law, the Woodards’ attempt to require timely payment as a condition of acceptance was not permissible. The district court did not agree with the insurer, Grange, holding that the statute does not prohibit a party from requiring payment as a condition of acceptance. The district court also rejected Grange’s argument that it had issued the settlement checks in a timely manner.
Grange appealed to the Eleventh Circuit, which concluded the requirements in O.C.G.A. § 9-11-67.1 were ambiguous and certified the questions related to the dispute to the Georgia Supreme Court. The Supreme Court held that O.C.G.A. § 9-11-67.1 permits unilateral contracts by the offerors (claimants) including demanding acceptance in the form of performance before there is a binding, enforceable settlement contract. It also held that O.C.G.A. § 9-11-67.1 does not preclude a pre-suit offer from demanding timely payment as a condition of acceptance.
The Court’s holding recognizes that subsection (a) of O.C.G.A. § 9-11-67.1 provides that a pre-suit offer must contain the following five “material terms:” (1) time period within which such offer must be accepted (which shall be not less than 30 days from receipt of the offer); (2) amount of the payment; (3) the party or parties that the claimant will release if the offer is accepted; (4) the type of release, if any, the claimant will provide to each releasee; and (5) the claims to be released. However, the Court concluded that subsection (a) permits pre-suit offers to include additional terms, as long as the minimum five material terms are also included. The court reasoned that subsection (a) is a list of necessary, but not exclusive, terms to be included in a pre-suit offer.
Subsection (c) also supports the Court’s interpretation. It provides, “Nothing in this Code section is intended to prohibit parties from reaching a settlement agreement in a manner and under terms otherwise agreeable to the parties.” Considering the mandatory language of subsection (a), which provides what terms “shall” be included, subsection (c) indicates that pre-suit offers can include terms in addition to those required by subsection (a). Further, the term “manner” in subsection (c) indicates that claimants may require recipients (usually insurers) of pre-suit offers to perform tasks beyond acceptance in writing for the acceptance to be valid.
The case will now return to the Eleventh Circuit for a determination on the merits.
Even though the Georgia Pre-Suit Offer statute does not apply to non-automobile claims, claimant attorneys in Georgia sometimes use the standards of this statute in making pre-suit offers in those non-automobile claims. While an insurer may not be under any statutory duty to comply with a pre-suit offer in non-automobile tort claim cases, it may still want to consider timely responding and complying with a pre-suit offer regardless of the tort claim involved as part of its best claims handling practices. And, insurers handling Georgia automobile claims need to be cognizant that the Georgia Pre-Suit Offer statute addresses minimum requirements. It is yet to be determined what will be considered a satisfactory “prompt payment” term or other terms of performance.